The great depression is termed as the worst monetary decline within the records of the modern world. The crisis, which lasted from 1929 to 1939, started following the crash in the stock market in 1929 October that resulted in the decline of thousands of investors. The impacts of the depression included the following;
The depression leads to the shrinking of the global economy. As a result of the crisis, the global economy declined by almost fifty percent within the very five years following the depression. In 1929, the economy production was around $105 billion, measured by Gross Domestic Product (GDP) (Amadeo, 10th January 2019). The economy started deteriorating in 1929 August, and before the end of 1933, the world had encountered at least five years of economic shrinkage. Besides, the Consumer Price Index declined by twenty-seven percent amid November !929 and March 1933. The decline in prices made many firms become bankruptcy.
Unemployment was another impact of the great depression. At the start of the crisis, and within the previous year of the Booming Twenties, the rate of joblessness was about 3.2 percent, which is less compared to the natural employment rate. However, by 1930, the unemployment rate had increased by more than double, reaching almost 8.7 %. The unemployment rate skyrocketed to about 15.9% in 1931, and 1932, it reached 23.6% (Amadeo, 10th January 2019). Besides, in 1933 the rate of unemployment reached 24.9%. That was the highest rate of unemployment during the recession and since then.
The great downturn caused almost half of the State’s banks to collapse. For instance, within the first ten months of 1930 alone, more than seven hundred and forty-four banks failed, which equates to one thousand percent more than the yearly rate in the 1920s (Amadeo, 10th January 2019). By the year 1933, more than four thousand banks had collapsed, and due to that, investors and depositors lost more than one hundred and forty billion dollars. Many people were astonished to realize that the banks used their money for investment within the stock market and hurried to withdraw their funds. These bank “runs” made many good banks to collapse too.
Amadeo, K. (10th January 2019). How the Lows of the Great Depression Still Affects Us Today. Retrieved
from https://www.thebalance.com/effects-of-the-great-depression-4049299
These are all great points but in America, FDR began implementing programs to bring the US out of the depression; instead the depression lasted for all three of his terms and into the 4th. Why did America go through 12 years of the depression? Do you think government should have let the economy recover on its own?